Definition
A capital efficiency metric comparing net cash burned to net new annual recurring revenue generated.
Formula
Net cash burned in period / Net new ARR in period
How to measure
Divide total net cash burn for the period by the net new ARR the company generated in that same period.
Why track it
A lower burn multiple indicates more efficient use of capital to generate growth, a key metric investors use to judge capital efficiency between rounds.
Example
A company burning $2 million to add $1 million in net new ARR has a burn multiple of 2.0.
FAQ
- What is Burn Multiple?
- A capital efficiency metric comparing net cash burned to net new annual recurring revenue generated.
- How do you calculate Burn Multiple?
- Net cash burned in period / Net new ARR in period
- Why track Burn Multiple?
- A lower burn multiple indicates more efficient use of capital to generate growth, a key metric investors use to judge capital efficiency between rounds.